Landlords are continuing to look towards expanding their portfolios despite increasingly punitive tax measures levelled on the buy to let sector, proving that there is still an enthusiasm for further investment.
New research from broker Mortgages for Business found that the number of respondents hoping to add to their portfolios is up to 48 per cent from 45 per cent since November. This also marks significant growth in comparison to the 41 per cent of landlords hoping to expand their portfolios a year earlier.
186 property investors completed the survey, which aimed to investigate landlord portfolios and how they are managed. It was found that landlords are increasingly looking towards five year fixes rather than three. In May 2016, three and five year fixes were the favourite of 18 per cent and 21 per cent of landlords respectively. However, Mortgages for Business has reported that there has been a significant shift in investor preference, with 42 per cent of landlords now opting for a five-year fix.
Three year fixed rates are now less popular even than 10-year fixes, chosen by a mere 5 per cent of respondents. This figure is less than a third of their popularity last year.
The government increased stamp duty last year on second homes by 3 per cent in an attempt to free up property for first-time buyers. Meanwhile, mortgage interest relief for residential buy-to-let properties has been reduced to the base income tax rate, which is just 20 per cent.
CEO of Mortgages for Business, Steve Olejnik, said: ‘Although we expect buy to let lending to reduce somewhat this year, these results demonstrate that landlords are a resilient bunch, capable of adapting their investment strategies to successfully accommodate the new fiscal and regulatory landscape. Incorporation is becoming a standard practice and the move towards five year fixed rates allows landlords to maximise their borrowing options.’